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The Higher Education Bubble

Time Magazine recently reported on a study showing that 85% of college graduates are now moving back home. They are now saddled with crushing student loan debt, and they’re unable to find the work they were led to believe would be abundant once they graduated.

Many of those who are actually able to find jobs have to settle for low-paying work that doesn’t take advantage of their degree. According to Doug French in the Christian Science Monitor, “In the United States, 80,000 bartenders as well as 317,000 waiters and waitresses have college degrees. Nearly a quarter of all retail salespersons have a college degree. In all, 17 million Americans with college degrees are working at jobs that do not require a bachelor’s degree."

Successful businessman, hedge fund manager, and venture capitalist Peter Thiel was recently interviewed by TechCrunch. He believes that education is the next big bubble that will burst. “A true bubble is when something is overvalued and intensely believed. Education may be the only thing people still believe in in the United States. To question education is really dangerous. It is the absolute taboo. It’s like telling the world there’s no Santa Claus.”

The article’s author, Sarah Lacy, goes on to say “Like the housing bubble, the education bubble is about security and insurance against the future. Both whisper a seductive promise into the ears of worried Americans: Do this and you will be safe. The excesses of both were always excused by a core national belief that no matter what happens in the world, these were the best investments you could make. Housing prices would always go up, and you will always make more money if you are college educated."

In the New York Times, Hannah Seligson reports that “the median starting salary for those who graduated from four-year degree programs in 2009 and 2010 was $27,000". Is that really worth the price of admission?